Great price & location
We stayed at the Hotel Margherita for a week in May 2006 and enjoyed this small, family-owned hotel.
Highlights included: a great view of the sea, complimentary breakfast in the mornings, incredibly sweet and friendly staff, beautiful tile floor in our room, balcony to sit and relax on, and close proximity to Praiano's church and bus stop where you can catch a ride to nearby towns (Amalfi, Positano, etc).
Downside: no room service, the bed was two singles pushed together, and the steep hill we had to climb from the main part of Praiano back up to the hotel.
If you're looking for a place with full amenities like 24-hr room service and a spa, stay at a larger hotel in Positano. If you're hoping for peace and quiet away from the hustle and bustle of the more touristy areas, this is the spot for you. It's quiet, relaxing, and you can dip your toes in the rooftop pool or enjoy a glass of wine on your balcony.